Client Alert- The Inflation Reduction Act of 2022

A copy of this Client Alert can be found here.

On Friday, August 12, 2022, the House of Representatives passed the Inflation Reduction Act of 2022, following the Senate’s passage by a 51-50 vote with Vice-President Harris’ vote breaking the 50-50 tie.

Once signed by the President, the Act will include:

• A 15% corporate minimum tax, based on a corporation’s book earnings, referred to as the Adjusted Financial Statement Income (AFSI) a/k/a book income. The minimum tax would apply to  corporations with more than $1 billion of AFSI (and at least $100 million for members of foreign-parented international financial reporting groups in revenues).

*Exceptions from the tax include corporations with private equity investments and some   form of a deduction for accelerated depreciation (details yet to be revealed).

• A 1% excise tax on corporate stock buy-backs, effective January 1, 2023 (which tax applies to the purchasing corporation and not the selling shareholder).

• $80 Billion of funding to the IRS for hiring additional auditors, modernizing IT and enhancing customer services (which means more audits down the road).

• Additional renewable energy credits, expansion of Affordable Care Act premium subsidies, and directions for the government to negotiate lower prices on what seniors pay for drugs.

For additional information, please contact any of the following: Stuart Anolik at [email protected] or Jess Bahs at [email protected], with any questions or more specific situations.